This
paper studies political competition when there is a risk that one of the
parties could instigate political unrest, for example by encouraging
rioting, after losing an election. We show that the threat of unrest has a significant
impact on voting behaviour and on policy setting. The weaker party’s
information about the compromise needed to prevent the stronger party from
opting for unrest is critical: the strong party is less likely to win the
election when the weak party is better informed, because the weak party can
then more reliably prevent political unrest by implementing a compromising,
“centrist” policy. Another notable result is the model’s
ability to explain platform divergence: uncertainty over the credibility of
unrest leads to political posturing. The citations following its
publication show that the paper has been important to academics studying
how warring factions create democratic institutions as an indirect way to
share power.

This
paper characterises when specificity is needed to increase efficiency in
bilateral contractual relationships. Unlike previous work, in which traders
select specific technologies as a way to commit themselves to trading
jointly, I demonstrate the value of specificity in settings with long-term
contracting. The main results are that: traders opt for specificity when
one trader makes a cross-investment and either (1) this cross-investment
has a direct externality on the other trader, (2) both parties invest or
(3) private information is present. Specificity (e.g. from non-salvageable
investments, specific assets and technologies, narrow business strategies,
and exclusivity restrictions) is equally effective regardless of which
trader's alternative trade payoff is reduced. Furthermore, the mechanism
works both with and without renegotiation. I apply the theory to offer a
novel perspective on vertical integration and a regulatory debate in
franchising. I also test the theory using data on non-compete covenants.

We
model the market for news as a two-sided market where newspapers sell news
to readers who value accuracy and sell space to advertisers who value
advert-receptive readers. In this setting, monopolistic newspapers
under-report or bias news that sufficiently reduces advertiser profits.
Paradoxically, increasing the size of advertising eventually leads
competing newspapers to reduce advertiser bias. Nonetheless, advertisers
can counter this effect if able to commit to news-sensitive cut-off
strategies, potentially inducing as much bias as in the monopoly case. We
use these results to explain contrasting historical and recent evidence on
commercial bias and influence in the media.

This paper resolves three empirical puzzles
in outsourcing by formalizing the adaptation cost of long-term performance
contracts. The main insight is that long-term contracts interfere with
beneficial market forces when side-trading with a new partner (to exploit
an adaptation) alongside a long-term contract is less effective than
switching to the new partner when the contract expires. Long-term contracts
that prevent holdup of specific investments then induce holdup of
adaptation investments. Contract length therefore trades off specific and
adaptation investments. Length should increase with the importance and
specificity of self-investments, and decrease with the importance of
adaptation investments for which side-trading is ineffective. My general
model also shows how optimal length falls with cross-investments and
wasteful investments.

This paper investigates experimentally how
organisational decision processes affect the moral motivations of actors
inside a firm that must forego profits to reduce harming a third party. In
a “vertical” treatment, one insider unilaterally sets the
harm-reduction strategy; the other can only accept or quit. In a
“horizontal” treatment, the insiders decide by consensus. Our
2-by-2 design also controls for communication effects. In our data,
communication makes vertical firms more ethical; voice appears to mitigate
“responsibility-alleviation” in that subordinates with voice
feel responsible for what their firms do. Vertical firms are then more
ethical than the horizontal firms for which our bargaining data reveal a
dynamic form of responsibility-alleviation and our chat data indicate a
strong “insider-outsider” effect.

Donors often rely on local intermediaries
to deliver benefits to target beneficiaries. The selected recipients are
natural monitors: they observe what they receive. However, recipients may
withhold complaints when feeling grateful to the intermediary for selecting
them, or unentitled to benefits. Furthermore, the intermediary may distort
selection (e.g. by picking richer recipients who feel less entitled) so as
to reduce complaints. We design an experimental game representing the
donor’s problem. In one treatment, the intermediary selects
recipients. In the other, selection is random - as by an uninformed donor.
In our data, random selection dominates delegation of the selection task to
the intermediary. Selection distortions are similar, but intermediaries
embezzle more when they have selection power because they correctly
anticipate that gratefulness for being selected will reduce complaints. Our
results identify a problem that could arise in a wide variety of
development settings, including social funds, decentralisation and participatory
projects where there is a risk of ‘capture’.

This paper studies how privatising service
provision (shifting control rights and contractual obligations to
providers) affects political accountability. There are two main effects.
(1) Privatisation demotivates governments from investigating and responding
to public demands, since providers then hold up service adaptations. (2)
Privatisation demotivates the public from mobilising to pressure for
service adaptations, since private providers indirectly hold up the public
by inflating the government's cost of implementing these adaptations. I
also characterise when politicians will be biased towards/against
privatising to reduce/increase public attention and I show why privatising
utilities may reduce subsidies and increase consumer prices.